Profit When These IPO Lockups Expire
Karen is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Lost behind the Facebook headlines are three IPOs with lockup periods expiring in September that are worth a closer look. These companies were selected based on their industry sector, product demand, and growth potential.
Vocera Communications (NYSE: VCRA) fills the niche of providing encrypted delivery communication for hospital employees via downloadable apps for iPhones, Android and Blackberry smartphones. Vocera Commander provides immediate alerts and communication capabilities in emergency situations. Vocera Alert provides encrypted delivery and receipt acknowledgement of lab test results and other time-sensitive information. Vocera Chat is a cross-platform app that allows staff members to communicate with each other either verbally or through texting.
What makes Vocera Communications so attractive is their lack of competition. At the moment, there are no rivals providing HIPPA-compliant secure intelligent communication in the health care field. The stock currently trades around $28.00-$30.00, which is about $10.00 above the IPO price of $16.00. The lockup period expires September 24th, and, if enough shares are sold, it may present an opportunity for investors to buy on the dip.
Entering the competitive world of Software-as-a-Service (SaaS) is Demandware (NYSE: DWRE). The company offers a Demand Commerce platform that allows e-commerce vendors to easily custom design, implement and manage their e-commerce sites. The platform can create unique marketing campaigns that can be updated to meet changing consumer preferences. Demand Commerce can be used on multiple websites, mobile apps and digital storefronts.
As with any hot market sector, e-commerce has its share of heavyweights. Demandware’s competitors include IBM, Oracle/ATG, eBay, MarketLive and Venda. Demandware is trying to stand out through its merchandising capabilities, platform reliability, and ease of use, speed and cross-channel integration. The stock’s initial IPO offering price was $16.00 and is currently trading around $26.00-$28.00. The lockup expires on September 11th, which could provide an attractive entry point should the stock price decline in response to selling.
Gaslog (NYSE: GLOG) owns, operates and manages carriers that transport liquefied natural gas (“LNG”) for international energy companies. Gaslog has ten wholly-owned carriers, of which two are currently operating and eight more are under contract for construction by Samsung Heavy Industries. In addition, the company manages and operates 11 carriers owned by BG Group. Gaslog has secured multi-time charter contracts that start in 2015 and end in 2021, and it estimates their revenue will exceed $1.3 billion during this time period.
Gaslog faces stiff competition not only from other independent carrier companies but large corporations operating their own fleet. But thanks to the latest construction technology, Gaslog’s carriers are more cost-efficient to run than competitors operating older carriers. And the costs of purchasing and maintaining LNG carriers act as a natural barrier to companies considering entering this business.
With the current glut of natural gas in the market, Gaslog’s stock price has dropped from the IPO price of $14.00 to around $10.00-$11.00 a share. The lockup period expires on September 26th and may drop further if current stockholders choose to sell. Analysts agree that LNG’s current price won’t remain low forever and this situation may present an opportunity to buy Gaslog’s stock before natural gas prices start to rise.
Investors can take advantage of IPO lockup expirations by purchasing stock either on price dips or when prices have dropped in response to market conditions. But there’s always an extra element of risk with companies that aren’t time-tested, and investors should perform their due diligence with additional care.
kprogers has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.